The EcoSystem of Pakistan related to startup
Foreword
“The use of Business Consultancy is an accepted business practice in many sectors. But the center of interest of public discussion continues to be on the cost of consultancy; there has been very little research or analysis of the value that this can generate – either for clients or the economy. This report seeks to address the opportunities available in the EcoSystem of Pakistan for startups and how we will ensure positive outcomes. Like generating a healthy profit margin for investors.
Oak Business Consultants takes pride in presenting its findings of a pioneering research program to quantify the value and opportunities for Startups in the Pakistan region.”
Sadaf Abbas
CEO
Oak Business Consultant
Who do organizations use Business Consultants?
- Consultant assists in high-value technical support
- Professional expertise in local areas
- Availability of resources
- Flexible working hours
- Availability of quality professional business information
- High-end Business connections
Oaks Research Methodology
Oak Business Consultant has and still works with a highly qualified industry expert committee to develop the most robust and objective research methodology.
This highly qualified professional committee consists of senior representatives from the various consulting industries, regulatory bodies such as FBR, Satrategia (Market Research company), and research papers made available on the internet.
Our Feasibility Study consists of three areas in response to venture capitalist “six most common questions.”
- The EcoSystem of Pakistan related to startup
- The growth rate of startups
- Potential in the Market
- The gap between start-up and investor
- Why investors are hesitant
- As consultants, how we can help to fill the gap
The EcoSystem of Pakistan related to startup
The startup ecosystem of Pakistan is growing at an exceptionally fast rate each day. At some point in a startup, the question about investments is inevitable. This is where the founder/founders of the Start-up have to decide whether they want to scale their businesses with or without investment.
Here is an investor’s perspective on the current condition of the entrepreneurial ecosystem in Pakistan.
Hence a few months ago, e-commerce company Markhor, which works with local artisans to produce high-quality men’s leather shoes, became Pakistan’s most successful Kickstarter campaign, raising (7) times more than its intended goal, catching the attention of Seth Godin and GOOD Magazine.
Statistics:
Firstly, these statistics are both encouraging and indicate a need to strengthen the country’s entrepreneurship ecosystem to support the capacity of young entrepreneurs.
The total population of Pakistan is 220M, out of which 70% are under 30. The internet growth rate each year is 17%, which are all positive demographics.
Pakistan is projected to be among the fastest-growing economy in the coming years, with a projected annual growth rate of 6% by 2026. Moreover, in 2016 MSCI reclassified the country’s status from frontier market to emerging market, easing international funding access. According to the governmental survey, the country will have an additional 700k high-income and 2.1M middle-income households.
Beyond these economic indicators, digital consumption is on the rise, with the improvement of connectivity for local telecom grows to 150m subscribers, with 40% of them having access to 3/4g.
Also, the ecosystem is becoming more indigenized.
Since 2010 there have been 720 startups (67% still active) with hundreds more successfully raising funding.
Some of Pakistan’s biggest funding deals have taken place in recent years, highlighting vast opportunities for local startups and increased investor focus on a country such as Pakistan.
Despite the smaller scale, we can see the emergence of three key components of the startup ecosystem: government engagement, support for talent; and linkages to global incubators and VCs.
The growth rate of startups and The EcoSystem of Pakistan
The rise of Tech Hubs
Thus, according to the GSMA Ecosystem Accelerator program’s tech hub landscaping research, Pakistan saw a 30% growth in the number of active tech hubs between 2018 (36 technology hubs) and 2016 (26 technology hubs), positioning itself as the largest tech ecosystem in South Asia after India.
Most of these organizations are spread around the country’s three biggest cities – Islamabad, Karachi, and Lahore. A noticeable point to consider is that out of the 10 most successful Pakistani startups in 2019, (9) of them are technology startups.
Market Potential
Firstly, Pakistan is a market with immense potential and is growing at a rapid pace. According to a recent Pakistan Startup report survey, the eCommerce market size of the country alone is valued at $15M.
Therefore, there are currently various startups that are working smart and effectively showing significant success in the Pakistani market. These startups have been independently founded, and the teams that have benefited from incubation or accelerator programs.
International firms have already identified Pakistan as a favorable market for a major investment of capital.
“Rocket Internet,” for example, has 8 different ventures running in Pakistan, including daraz.pk, food panda, and Lamudi.
“Naspers’ backs OLX.com.pk and Shibsted Media Group recently launched asani.com.pk in direct competition to OLX.
The gap between start-up and investor
Several problems are starting a business in Pakistan and finding investors. These problems exist in the forms of delay in communications, centralized decision-making, lack of loyalty, lazy labor force, and free-rider problems. All these contribute to the high costs of doing business in this country.
Many investors have complained there is a lack of communication between them and the startup individuals. The first and foremost requirement of starting a business is the availability of proper documents and communication mediums. Usually, most startups have no Pitch Decks and a proper business plan for investors. They do not reply to the emails and do not let their foreign counterparts know certain changes in decisions.
Thus, the startups usually have no vision and mission of a company. Investors are less aware of Pakistan’s culture, where most decisions and management decisions are taken orally.
As consultants, how we can help to fill the gap
Most people wouldn’t embark on a long journey without a plan. It’s unusual to start something potentially costly and time-consuming without seeking advice and taking the appropriate instruction beforehand. Still, many small business owners neglect to talk to a financial advisor or are reluctant to do so when starting a new business.
Financial Advisor
Hence as financial advisors, we can ask the right questions and find the right answers to make investor life easier. We will also make your business more efficient and more profitable by focusing on the actions that will get results.
By observation
As an advisor, we can provide you with timely insights regarding such factors as your exposure to risk, where you can economize, and investment opportunities.
Gain an Outside Perspective
Sometimes management is not able to see existing problems. After working in the same conditions for an extended period of time, it is easy to overlook issues.
As a Business Consultant, we act as a neutral third party who can provide your company with an outside perspective about what you are doing wrong and where you can improve. With a fresh pair of eyes, we can quickly spot the challenges that may be holding a company back. This can result in essential changes that have the potential to benefit investors highly.
Communication Gap between Startup and Investors
As per the recent survey, the most startup fails to explain their idea and business model due to lack of communication, information availability, and resources.
We, as Business Consultants, can prepare Business Plans, Pitch Decks, Financial Models, and Plan for potential startups so that it is easier for the investor to understand the business accordingly.
Compliance Issues
Also, regulations keep changing, existing regulations are developed upon, and brand-new ones evolve to address growing issues to specific problems. It is challenging for organizations to keep on top of this, to ensure that all compliance requirements are continuously and comprehensively met. In Pakistan, company law is very complicated. The taxation law is divided into three main categories (Sindh, Punjab & Federal); every province has its own Taxation and Company Law.
We can serve as Compliance Advisors to safeguard startups and Investors to avoid any penalties in the future.
Extensive Knowledge of the Industry
Also, with extensive experience and knowledge about industries in Pakistan. We have worked with several companies with many industries, SMEs, and Startups, studied and implemented different strategies, and are aware of everything there is to know about the Business and culture.
Technology Consulting
Firstly, with the initiative of Digital Pakistan, technology is moving faster. Even the most qualified IT experts can face a number of obstacles as they struggle to keep their organizations on the cutting edge of innovation, quality, and design without hurting the company’s bottom line. Thus this is where business strategy consulting services come into play. It’s an investment that will pay off when your business has the tools it needs to grow and thrive.
Fact Check
- Firstly, according to Euromonitor, Pakistan has the fastest-growing retail market globally, hence with the market expected to grow by 8.2% annually from 2016 to 2021.
- Secondly, Pakistan is one of the fastest-growing economies in the world.
- Its GDP growth is 5.3%. Greater than Australia.
- 65% of the massive population is all youth under the age of 25. Labor is just getting ready to join the workforce.
- Skill sets and potential talent available in the market are abundant.
- The fourth-largest middle-class population is in Pakistan.
- Moreover, Investors are allowed to hold 100% equity.
- Finally, 12500 Pakistanis are working in Silicon Valley, and a lot of them returning to Pakistan to start their own business.
How Oak Business Consultant can help the VCs
To conclude, Oak Financial and Management Consultant is a leading consulting firm specializing in financial services in Business Process, Financial Planning, Assessing Financial Performance, Business case-study, Accounting, and Financial support in every industry, Especially professional services such as SaaS Services, Manufacturing, and the IT industry. We have expertise in every sector in Pakistan, which is operating.
Firstly, VCs have several major concerns for investing in any startup. VCs want to invest in companies that can grow to become massive and also safeguarding their investment. Furthermore, it isn’t easy to review day-to-day functions and follow-ups. Therefore we, as consultants, thoroughly review all documents and strategic planning along with feedback. And since one of the major concerns is negative references. Since in many cases, VCs are misinformed about the key person of the team. So we can ensure that proper references are provided with background checks.
Below are some activities we perform on behalf of the VCs.
- Investing in the domain you prefer
- Background checks and track record of company founders
- Examining the monetization strategy
- Financial Statement audits
- Physical checks
- Researching the use of funds ( investment)
- Business Plans
